Corporate

Sampath Bank records 53.6% post-tax profit growth in 1Q

Sampath Bank continued to maintain its growth momentum in the 1st quarter 2010 as well, by recording all-round impressive results, compared to the corresponding period in 2009.

The Pre-Tax Profit of the Bank at Rs. 791.5 million for the 1st quarter 2010 registered a growth of Rs. 93.3 million (13.4%), over the previous year’s Rs. 698.2 million, aided by several factors. The Bank’s continued success in professionally managing its core banking operations, paid rich dividends. The Net Interest Income (NII), which is the net return of the Bank’s entire fund-based operations, made the single largest contribution for the increased profitability, by rising from Rs. 1,741.5 million in 2009 to Rs. 2,199.5 million in 2010, registering an impressive growth of Rs. 458.0 million or 26.3%.

The growth in NII, in turn was facilitated by the continued expansion in the fund base and the success of the Bank in managing the returns thereon, as reflected by the improvement in the Net Interest Margin (NIM). Consequently, the NIM rose from 5.07% in the 1st quarter 2009 to 5.59% in 2010, as shown above.

Prudent fund-management measures taken by the Bank, which included improving the composition of the fund-base on both sides of the Balance Sheet, managing maturity patterns and maximizing the financial returns of fund-based products, contributed towards increasing the NIM.

Furthermore, measures taken to minimise the NPA Ratio and timely re-pricing strategies of the ALCO, supplemented the task.

Apart from the NII, the other income of the Bank, bulk of which is Commission and Fee-Based income, too recorded a growth of 9.6% in 2010, over 2009.

The only source of core-banking income, which recorded a negative growth (by 55.1%) in 2010 was exchange income, largely due to the revaluation loss of Rs. 26.028 million, incurred in 2010, as against the revaluation profit of Rs. 113.994 Million recorded in 2009.

This in turn was mainly due to the appreciation of LKR against the US Dollar, from Rs.115.60 as at 31.03.2009 to Rs. 113.95 as at 31.03.2010.

The operating expenses of the Bank recorded an increase of Rs. 16.9% during the period, mainly due to expenses incurred in connection with the rapid branch expansion program undertaken and the salary revision to the staff effective 1st April 2009.

The Specific Provision for Loan Losses for the period under review amounted to Rs. 702.569 million, as against Rs. 254.718 million for the corresponding period last year.

This increase, of Rs. 447.851 million in specific loan loss provisions, was due to the Bank’s decision to make additional loan loss provisions as a prudential measure against certain identified NPLs, over and above the prevailing time based provisioning requirements.

Hence, additional provisions totalling Rs. 516 million were made, disregarding the collateral held against these NPLs.

This move also helped the Bank to increase its Provision Cover (excluding the General Provisions) against the NPLs from 54.34 % as at 31.12.2009 to 61.83 % as at 31.03.2010.

However, the increased recoveries helped to off-set partially, the effect of these additional provisions on the bottom line.

The recoveries, which rose from Rs. 133.012 million in 2009 to Rs.424.457 million in 2010, included a specific recovery of Rs. 331.9 million, made against a Foreign Currency Bond, for which full provision was made in 2008.

Taprobane Holdings Ltd structures 4-year debenture issue for People’s Leasing Co. Ltd

People’s Leasing Co. Ltd (PLC) has announced the issue of senior, unsecured, redeemable, rated Debentures amounting to LKR 630 Million.

The issue was assigned an ‘A-(lka)’ National Long-term rating by Fitch Ratings Lanka Ltd.

The rating agency has further confirmed PLC’s national long-term rating at ‘A-(lka)’ with a stable outlook. PLC is one of Sri Lanka’s largest specialized leasing companies, with assets amounting to over 30 billion Rupees as at 31 December 2009 and is wholly-owned by state-run People’s Bank, which has a ‘A(lka)’ rating and is the country’s second-largest state bank in terms of assets.

The debt issue was structured, managed and privately placed by Taprobane Holdings Ltd., who has recently ventured into corporate finance activities.

The issue features semi-annual interest payments and capital redemption at maturity, i.e. in four years and the proceeds of the issue will be used to fund the growth of PLC’s lease, hire purchase and loan portfolios.

The corporate finance activities of the Taprobane Group extends to both debt and equity issue management.

Debt issue management involves arranging, structuring, managing and placing short to long-term debt issues of commercial paper/promissory notes, debentures, asset/mortgage-backed securitization facilities, zero-coupon bonds etc. Equity issue management involves management of initial public offerings/listings via introductory method, private placement of shares and mergers and acquisitions. Activities such as loan syndications, capital restructures, business valuations, feasibility studies and corporate advisory services are also undertaken by the entity.

Seylan Bank, posts Rs. 543.301m PAT

Seylan Bank scored a first from among Sri Lanka’s private commercial banks with its AGM recently.

The Bank recently posted a Rs. 543.301 million Profit After Tax for 2009 representing an increase of 250% over the previous financial year. During the same period, the Bank’s cost-to-income ratio showed a marked improvement decreasing from 75.79% to 67.82%, while the total capital adequacy ratio under severe pressure during the end 2008 crisis rose from 8.06% to 11.74%.

The Bank’s Profit before Tax increased from Rs. 155.241 million in 2008 to Rs. 892.572 million in 2009 thus recording an unprecedented increase of 475%. Meanwhile the price of Seylan Bank Ordinary Shares has shown a steady increase from Rs. 28.50 on 31 December 2008 to Rs. 37.00 on 31 December 2009.

The Bank’s non-voting shares have performed even better by going up from Rs. 6.00 on 31 December 2008 to Rs. 16.00 on 31 December 2009.

Chairman of the Seylan Bank, Eastman Narangoda said, Our renaissance is a 100% success story. The past is now firmly rooted in history.

I’m proud to state with a deep sense of conviction and confidence, that Seylan Bank today enjoys stability and profitability. Operating under the Central Bank-appointed new Board of Directors, and, with the implementation of a far-reaching Strategic Plan, we launched a strong recovery drive encompassing many areas.

This, in turn, successfully restored investor confidence. The dividends are being enjoyed by our thousands of shareholders.

Ceylinco Life’s claims settlement best among insurance giants

Life insurance leader Ceylinco Life’s record of claim settlement has been confirmed to be the best among the country’s top five insurance companies by the sector regulator, the Insurance Board of Sri Lanka (IBSL).

Figures released by the Board for the year ending December 31, 2009 reveal that Ceylinco Life, the largest life insurer by a margin of more than Rs 2,705 million, had the lowest number of claims outstanding at the end of the concluded financial year.

The IBSL’s statistics show that Ceylinco Life, whose share of the life insurance market stood at 31.13 per cent with premium income of Rs 7,523 million at the end of 2009, was responsible for only 82 out of a total of 100,733 claims outstanding in the life insurance segment, just .08 per cent of the total.“Paying claims is the business of an insurance company, and it is a strict policy at Ceylinco Life to settle every legitimate claim as quickly as possible,” Ceylinco Life Deputy Chairman R. Renganathan said. In value terms, claims outstanding at Ceylinco Life as at December 31, 2009 totalled Rs 102.4 million, as against a total of Rs 3,220 million for all life insurance companies.